How to Select a Supplier Climate Data Collection Solution?
In today’s dynamic business landscape, companies are increasingly focused on sustainability, and the need for supplier engagement has never been greater. To track progress toward supplier engagement targets, businesses must implement effective supplier climate solutions. These solutions play a vital role in building robust supplier engagement programs, providing critical data for target tracking, and enhancing visibility into supplier GHG program maturity. Moreover, they facilitate the collection of primary emissions data, which can refine a company’s GHG emissions calculations and reduction tracking in the future.
The Growing Significance of Sustainable Procurement
Sustainable procurement is a topic gaining momentum, as evidenced by the 2022 Gartner/SPP Sustainable Procurement Pulse Survey, where 83% of respondents acknowledged the increasing importance of sustainable procurement over the past two years. Sustainable procurement applications empower organizations to assess supplier performance across various ESG issues within a unified platform. These applications offer essential capabilities, including:
Data Collection: These solutions enable organizations to request sustainability information from all their suppliers, both public and private, through self-assessment surveys. Suppliers can submit necessary documentation, streamlining the process.
Data Analysis: Sustainable procurement applications allow organizations to analyze supplier data based on multiple criteria, helping identify areas for improvement. They also present an overall “supplier score” for informed decision-making.
Domain Expertise: These applications offer domain expertise and standard questionnaires to gather supplier information, especially for those just starting with sustainable procurement. Some even provide materiality guidance to focus on the most relevant issues.
Market Trends and Adoption
Supplier climate solutions are relatively new but gaining traction rapidly. In the 2022 Sustainable Procurement Pulse Survey, 54% of respondents reported using applications for ESG data collection, with an additional 45% planning to adopt such applications by 2024. The surge in sustainability-related legislation drives interest in these tools, as they are essential for supply chain due diligence and transparency.
Selecting the Right Data Collection Solution
When choosing a data collection solution, companies should consider several key factors:
Determine the scope of data needs, whether solely climate-related or encompassing other ESG aspects.
Decide between using an existing “out-of-the-box” solution or a proprietary questionnaire.
Explore industry reporting tools to minimize duplicate requests to shared suppliers.
Enhancing Supplier Collaboration
Suppliers often receive multiple ESG-related requests from customers. Choosing a supplier climate solution that eases survey burdens increases the likelihood of collecting high-quality data. Standardized surveys that can be shared with customers provide an advantage, although they may not fully meet specific data needs. If a proprietary solution is preferred, align questions with standardized surveys to reduce “survey fatigue.”
To completely avoid direct questioning of suppliers as a first step, new options are available today through AI data pipelines. They allow companies to automatically gather climate-related ESG data of suppliers from public sources like CSR reports. This way, they can acquire data without long lasting survey processes.
Beyond data collection, companies should consider whether their selected solution supports other aspects of their engagement program, including supplier communications, resource sharing, data analytics, and data verification. Collaborating with internal stakeholders early in the process can streamline data requests and optimize systems.
Implementing the Solution
Once a supplier climate solution is identified, integrate it into the overall program implementation plan. Companies can choose a phased approach or initiate data collection with all targeted suppliers right away, depending on their strategy.
Suppliers may have concerns about data confidentiality, particularly with granular GHG inventory data. Addressing these concerns is crucial, as this information can reveal sensitive business details.
Market Recommendations by Gartner
According to the research firm Gartner, supplier sustainability applications benefit all organizations, both public and private, irrespective of size. They are vital for meeting stakeholder expectations and adapting to regulatory changes. Publishing a code of conduct is no longer sufficient; organizations must demonstrate due diligence to ensure supplier adherence. These applications enable scalability and impact, making them a valuable addition to any sustainable procurement strategy.
Key Considerations for Procurement / Sustainability Leaders
Assess the need for a supplier sustainability application based on your sustainable procurement program’s scope.
Create a shortlist of vendors considering the ESG issues you want to address and the necessary application capabilities.
Prioritize vendors that emphasize supplier experience management, as supplier adoption is crucial.
Seek a combination of tools rather than a single solution to address specific sustainability topics in-depth.
In conclusion, sustainable procurement is the way forward, and supplier sustainability applications are a powerful ally in achieving sustainability goals while enhancing supplier engagement and transparency.
A specialized solution for Supplier Climate Action
Our Climate Intelligence Platform offers a comprehensive solution to improve collaboration with your suppliers on climate actions. It automates the process of data collection, streamlining engagement with suppliers, and provides long-term tracking to improve decarbonization efforts.
Start tracking progress towards your Scope 3 targets by accessing existing data from over 35.000 companies and proceed by gathering primary data from your suppliers. Utilize the supplier-specific data to refine your company’s own greenhouse gas emission calculations and reduction tracking.
The platform is used by leading companies across industries from Telecommunication, to Automotive and Manufacturing, over Food, Energy and FMCG to reach their Scope 3 targets.
In order to meet climate targets within their supply chain (Scope 3), companies must gather and interpret extensive data on emissions, climate risks, and other factors from their suppliers. Until now, this widely dispersed data could only be acquired through manual processes and individual supplier consultations, demanding significant time and resource investments. However, a transformation is underway. Advanced AI technology now enables the quick and automatic aggregation of climate-related supplier data from public sources, facilitating its analysis for scope 3 decarbonization.
How exactly can this work? That’s what we shared at CHOICE Event #61 with Yasha Tarani (CEO) and Nikolas Martens (Head of Engineering) from The Climate Choice. Find here their most important insights.
Why is Scope 3 Decarbonization important?
Deloitte 2023 CxO Sustainability Report
Deloitte conducts an annual study that delves into the priorities of top executives (CxOs) in large companies across the globe, shedding light on why they choose to address specific issues. Their findings reveal a significant shift in the corporate landscape. Notably, climate change has ascended to a position of paramount importance, second only to economic outlook. This signals a pivotal moment where climate concerns have permeated the highest echelons of corporate leadership. However, it’s imperative to recognize that the impetus to act on climate issues doesn’t merely stem from regulatory pressures. It also emanates from a multitude of stakeholders who demand action.
One crucial aspect that emerges prominently is the role of supply chain emissions (Scope 3). These emissions represent the lion’s share, comprising an average of 85% of a company’s total emissions. Yet, addressing supply chain emissions is a formidable challenge due to their indirect nature, which presents multiple complexities and obstacles.
Why is Scope 3 Decarbonization so hard?
Companies striving to meet their Scope 3 decarbonization targets encounter several significant challenges when it comes to effectively utilizing supplier-specific data. These challenges can impede their ability to take meaningful actions. Here’s a breakdown of these challenges and their implications:
Continuous Tracking:
Challenge: Managing annual data collection from a vast network of thousands of suppliers can be a daunting and resource-intensive task.
Implication: This continuous tracking requirement demands a robust system that can efficiently gather data from a multitude of sources without overwhelming the company’s resources. It also necessitates real-time or near-real-time data updates to stay current.
Data Quality:
Challenge: Supplier data often comes in various formats, documentation styles, and may lack comparability, making it difficult to draw meaningful insights or comparisons.
Implication: Ensuring data quality is paramount. Implementing standardization protocols, data validation, and normalization processes is crucial to derive accurate and actionable insights from diverse data sources.
Assessment Fatigue:
Challenge: Suppliers are frequently inundated with data requests from different customers, each with varying data needs, creating a state of assessment fatigue.
Implication: Companies must adopt a more strategic approach to supplier engagement. This includes minimizing repetitive requests, streamlining communication, and aligning data requests with suppliers’ capabilities and priorities to maintain productive relationships.
Lack of Incentives:
Challenge: Encouraging suppliers to actively engage in decarbonization efforts can be challenging, as they may lack motivation or a clear understanding of the benefits.
Implication: To address this, companies must develop a Theory of Change that outlines the incentives and benefits for suppliers to participate in sustainability initiatives. This may include cost savings, improved market access, or enhanced brand reputation.
The solution: the Climate Intelligence Platform
At The Climate Choice, we focus on solving the key challenges of Scope 3 decarbonization. We have therefore built the first climate-specialized platform that unites supplier data & engagement to rapidly reduce emissions. Our approach is designed to help companies kickstart their supplier climate program in days rather than in months.
So what does the approach look like? Here are the key steps:
Leveraging AI for Scope 3 Analysis: Begin by harnessing the power of artificial intelligence (AI) to analyze suppliers with publicly available data. This automated analysis provides valuable insights into their environmental performance, emissions, and climate-related practices. This initial assessment sets the foundation for informed decision-making.
Engaging Suppliers without Public Data: Recognize that not all suppliers may have publicly accessible environmental data. For such suppliers, the approach shifts towards assessing their maturity level in terms of sustainability practices. This assessment serves as a starting point, allowing you to provide constructive feedback and guidance.
Focused Benchmarking and Incentives: Identify your top suppliers and those contributing significantly to emissions within your supply chain. These key players warrant a more detailed and granular benchmarking process. Additionally, consider implementing incentive mechanisms to encourage these suppliers to actively reduce their environmental footprint. Incentives can take various forms, such as financial rewards or preferential treatment within your supply network.
The first step: AI Supplier Screening
To speed up the launch of your supplier engagement program while minimizing resource requirements, we present our new AI supplier screening program. This program leverages cutting-edge technology to streamline the process, ensuring efficiency and effectiveness throughout. Here’s a breakdown of how the AI supplier screening program operates:
1. Comprehensive Data Collection: The program incorporates an AI-driven data pipeline that autonomously gathers detailed Scope 3 information from diverse sources. This data pipeline is designed to collect granular data pertinent to your supplier profiles.
2. Robust Data Analysis: Once the data is collected, our system performs a meticulous analysis. It scrutinizes a range of climate data documents and taps into publicly available data sources to create a comprehensive profile of each supplier. This analysis extends beyond surface-level assessments to provide a deeper understanding of their climate-related practices.
How AI Supplier Screening Works:
List of Suppliers: The process commences with a list of your suppliers, encompassing the entirety of your supply chain network.
Identify Company: The AI system employs advanced algorithms to identify each supplier as a distinct entity, ensuring accuracy in the subsequent steps.
Identify Reporting Entity: It further distinguishes the reporting entity within the supplier organization, recognizing the entity responsible for providing climate-related data.
Identify Data Sources: The program identifies and categorizes the various data sources associated with each supplier, whether internal or external.
Extract & Verify Data: Leveraging state-of-the-art data extraction techniques, the AI system extracts and verifies the pertinent climate data from these sources, ensuring data accuracy and reliability.
What are the tangible outcomes of the AI supplier screening?
The AI supplier screening program yields a range of tangible outcomes that can significantly benefit your organization in its pursuit of Scope 3 goals. Here are the notable advantages and insights that emerge from this innovative approach:
Automated Analysis of Thousands of Companies: The program’s capabilities extend to the automated analysis of thousands of companies within your supply chain ecosystem. This extensive coverage ensures that you can comprehensively assess and engage with a wide array of suppliers, maximizing the program’s effectiveness.
Inclusion of Meta Data: In addition to climate-specific data, the analysis encompasses meta data that provides valuable context. This includes details such as revenue figures and sectors in which these companies operate. Such comprehensive insights enable more informed decision-making.
Audit-Ready Data: The data generated through the AI screening program is audit-ready, ensuring that it meets the highest standards of accuracy and reliability. This audit readiness is pivotal, especially when it comes to compliance requirements and reporting.
Accessibility via API: The convenience of accessing the data via an Application Programming Interface (API) streamlines its utilization within your organization’s existing systems and workflows. This seamless integration enhances the efficiency of your sustainability initiatives.
Key Insights Uncovered
The program goes beyond data collection to uncover key insights that can inform your sustainability strategy. These insights encompass:
Use Case Example: Supplier Maturity Structure
Supplier Maturity Structure: You gain a clear understanding of the maturity levels of your suppliers concerning sustainability practices. This allows you to tailor engagement strategies accordingly.
Trends in Climate-Related Data: The program identifies and highlights trends in climate-related data, providing valuable intelligence for decision-making and future planning.
Scope 3 Emission Breakdowns: Detailed breakdowns of Scope 3 emissions help you pinpoint areas of focus and prioritize decarbonization efforts.
Decarbonization Actions: The program’s analysis identifies potential decarbonization actions that can be taken. It offers actionable pathways to reduce emissions and improve sustainability performance.
Join the Early Access Program today
You can now seize the opportunity as one of the early adopters, accessing the full array of AI benefits for your Scope 3 targets through our exclusive Early Access program. By joining, you’ll experience firsthand the advantages we offer. We anticipate an average savings of 90% in both time and cost for the collection and analysis of supplier data. Don’t miss out on the chance to be at the forefront of this transformative technology.
3 Key Steps to Use Competitive Climate Intelligence
In today’s rapidly evolving business landscape, staying ahead of the curve requires more than just traditional market insights. The emergence of the future low-carbon economy has ushered in a new era of competitiveness. Companies now need to start navigating the complexities of climate information and strategies to maintain their edge. This is where the concept of competitive climate intelligence comes into play. In this article, we’ll delve into what competitive climate intelligence entails and outline three essential steps to effectively leverage it for your company’s success.
Understanding Competitive Climate Intelligence
“Competitive climate intelligence” is the systematic gathering and analysis of climate-related data and insights to drive informed decision-making. Stemming from the broader concept of “competitive intelligence,” which focuses on understanding market dynamics and competitors, competitive climate intelligence delves into climate-related aspects of business strategy. This intelligence goes beyond understanding the environmental impact of your operations. It encompasses understanding how your competitors are positioning themselves, identifying emerging opportunities, and assessing potential risks.
Benefits of Competitor Climate Insights
Here’s why incorporating information about your competitors’ climate strategies is crucial for positioning your business at the forefront:
Benchmarking: Analyzing your competitors’ climate data allows you to benchmark your performance against industry leaders. This comparison helps identify gaps in your sustainability efforts and set ambitious yet realistic goals to outperform.
Innovation Insights: Monitoring competitors’ climate strategies unveils innovative practices that can inspire your company’s approach. By learning from their successes and failures, you can adopt best practices and refine your own initiatives.
Market Positioning: Understanding how competitors position themselves in the low-carbon landscape helps you differentiate your brand. Identifying gaps in the market and addressing unmet sustainability needs can accordingly enhance your company’s appeal to conscious consumers.
Risk Management: By assessing competitors’ responses to climate risks and regulatory changes, you gain insights into potential challenges and opportunities. This proactive approach ensures your business is prepared for shifts in the regulatory and consumer landscape.
Collaboration Opportunities: Collaborative efforts within your industry can amplify impact. Analyzing competitor data highlights potential partners for joint sustainability initiatives, fostering a collective drive towards a greener future.
Investor Confidence: As environmental concerns grow, investors increasingly value companies with robust climate strategies. Demonstrating a comprehensive understanding of competitors’ approaches bolsters your credibility and attractiveness to investors.
Adaptive Strategies: The low-carbon economy is evolving swiftly. Analyzing competitor climate data aids in fine-tuning your strategies based on real-time insights. This adaptability allows your company to seize emerging opportunities and stay resilient in the face of change.
The key steps for Competitive Climate Intelligence
So how can your company take advantage of this and successfully implement climate competitive intelligence? Here are the three most important steps.
Step 1: Data Gathering and Analysis
The foundation of competitive climate intelligence lies in robust data collection and analysis. The first step is to identify and gather relevant data from both internal and external sources. While internal data might include your company’s carbon footprint and sustainability initiatives, external data encompasses market trends, competitor activities, regulatory changes, and public sentiment around climate issues. This is where AI tools shine, as they can efficiently sift through vast amounts of public data to provide actionable insights. By utilizing these tools, you can uncover hidden patterns, emerging trends, and valuable competitor strategies that inform your decision-making.
Step 2: Integration with Business Strategy
Climate intelligence should not exist in isolation; it must be seamlessly integrated into your company’s overarching business strategy. This involves aligning climate-related goals with core business objectives and identifying synergies that drive value. For example, using climate intelligence to optimize supply chain efficiency not only reduces emissions but also enhances cost savings. By weaving climate considerations into product development, marketing, and operations, you not only contribute to sustainability but also bolster your competitive position in the market.
Step 3: Continuous Monitoring and Adaptation
The future low-carbon economy is dynamic, with changes in regulations, technologies, and consumer preferences shaping its trajectory. As such, competitive climate intelligence is not a one-time effort but an ongoing practice. Establish a framework for continuous monitoring and adaptation. Regularly update your data sources, track competitor moves, and stay informed about industry shifts. This adaptive approach enables you to seize emerging opportunities swiftly and mitigate risks effectively.
Conclusion
As the business landscape transforms to embrace the challenges and opportunities of a future low-carbon economy, competitive climate intelligence emerges as a critical tool for success. By systematically gathering, analyzing, and integrating climate-related data, businesses can not only contribute to a sustainable future but also enhance their competitive advantage. With the aid of AI tools, the data collection process becomes more efficient, empowering companies to make informed decisions. Embrace these three key steps and start now to position your company at the forefront of the evolving business paradigm.
The Climate Power of Supply Chains – 10 Steps towards Decarbonization in Scope 3.
The pressing issue of climate disclosure are making it clear. CO₂ numbers are not enough to understand the climate performance of a company – as we all know. Instead, companies are establishing holistic climate management approaches in order to drive real change. A market transition that is very much highlighted by rising regulations such as the European Supply Chain Due Diligence Directive (CSDDD), the Corporate Social Responsibility Directive (CSRD) and the de facto standard for climate-relevant information from the Task Force on Climate Related Financial Disclosures (TCFD).
What is holistic climate management in supply chains all about?
However, there is even one step further to take. Sustainability leaders know that climate impacts, risks and necessary decarbonization actions don’t end at the office door. Instead, investors, customers and policymakers urge companies to take responsibility for their entire value chain and purchasing decisions. The growing climate crisis shows that supply chain resilience and the transformation of entire business models are more important than ever.
Challenge of going beyond the basic CO₂ Footprint in Scope 1 & 2
When addressing climate responsibility within and beyond the own company, it becomes tricky. As climate-relevant information in Scope 3 are connected to hundreds and sometimes thousands of suppliers. Meanwhile, your climate data needs to be accurate, granular, and auditable.
Achieving net-zero for Scope 1 and Scope 2 emissions presents a substantial technical and economic challenge for many companies. Addressing Scope 3 emissions adds an additional layer of complexity. Such as, but not limited to:
Consistent carbon accounting and climate performance tracking practices
The need to work collaboratively with suppliers and business partners
Handling multi-tiered supply networks and difficulties of engaging them in the improvement process
So how do sustainability and procurement leaders alike overcome this challenge?
Manage your Decarbonization Journey in Scope 3
Overarching climate goals in the supply chain can only be achieved by treating and involving the supply chain as a crucial aspect of any firm’s holistic climate performance. Therefore, businesses must collaborate with their suppliers to enable them to play a vital role in their climate transformation.
By publicly disclosing climate targets for Scope 3, emissions and decarbonization measures along the supply chain, an organization demonstrates accountability and provides stakeholders with vital information for understanding its climate performance. Beside regulatory pressure, new market mechanisms already show that those companies gain competitive advantages and are ahead of their peers. Undergoing a significant shift, business partners, customers and stakeholders alike increasingly consider climate impact in their decision-making. This presents the opportunity to align business strategies with market expectations and respond to the growing decarbonization demands proactively.
10 Steps towards climate-relevant data in Scope 3 – powered by Supplier Engagement
STEP 1 – SET YOUR FOUNDATION
To embark on the path of supply chain decarbonization, you must begin by establishing a solid foundation. Start by making your climate commitment public, setting ambitious targets that include your supply chain. Assess your emissions and clearly define your priorities for implementing actions and solutions in your own transition. Aim high and align your goals with the Paris Agreement’s 1.5°C target.
STEP 2 – ACCEPT THE AMBIGUOUS STATUS QUO
Acknowledging the diversity of targets, strategies, incentives, and requirements within your own company is crucial. Align your sustainability and procurement offices to ensure a successful program outcome. Assemble a dedicated #TeamClimate and ask yourselves the important questions: Why do we need this program? What outcomes do we anticipate? Who needs to be involved? With these answers, you can set the stage for success.
STEP 3 – BE SIMPLE!
Simplicity is key when starting your supply chain decarbonization journey. Avoid overwhelming complexity right from the beginning. Instead, focus on asking your suppliers simple yet essential questions: Have you set climate targets? Have you calculated your emissions? What climate actions are you planning to implement? By keeping it simple, you can prevent frustration and maintain momentum.
STEP 4 - START WITH YOUR HOTSPOTS IN THE SUPPLY CHAIN
Having set your climate targets and aligned your internal team, it’s time to identify the hotspots in your supply chain. Utilize third-party data, databases, screening or a spend-based approach to gain an initial understanding of your value chain’s status quo. Cluster suppliers based on their climate maturity and strategic importance to pinpoint the hotspots that require your attention. The Climate Intelligence Platform offers a swift and straightforward way to screen your supplier base and kick-start your supplier climate engagement program.
STEP 5 – CLARIFY DATA NEEDS FOR TEAM SUSTAINABILITY AND PROCUREMENT
Before engaging with your supply chain, ensure that your internal stakeholders are on the same page. Align your sustainability and procurement teams regarding data, processes, and next steps. This collaborative effort ensures that everyone is working towards the same goals and expectations. Clear communication is essential.
STEP 6 – SET UP THE PROCESS IN PROCUREMENT AND SUSTAINABILITY TEAM
Establishing the supplier engagement program is often organized by the procurement team. However, the sustainability team’s involvement is crucial in providing insights and publishing a clear message regarding your supply chain climate targets. This collaboration strengthens the credibility of your program and enables effective engagement with suppliers.
STEP 7 – START ENGAGING SUPPLIERS BY STRESSING THE “WHY”
Now it’s time to reach out and communicate with your suppliers. Make it a two-way conversation by inviting collaboration, sharing knowledge and resources, and guiding them through the journey. Highlight the benefits for suppliers supporting your climate initiative and provide incentives to get them on board. Build relationships and emphasize the collective effort needed to make a difference.
STEP 8 – DON’T OVERWHELM, STAY SIMPLE!
Understand that managing climate issues can be overwhelming for both you and your suppliers. Be open to feedback and improvement. Remember that we are all on this climate journey together, transitioning toward a low-carbon economy will take time. Motivate and engage your business partners, support them along the way.
STEP 9 – DARE TO TAKE DECISIONS
With information, feedback, and data in hand, it’s time to make decisions. Data should be utilized to gain insights and inform decision-making processes. Define a baseline from which you started and plan the next steps that bring you and your suppliers closer to achieving Net Zero. Address crucial questions such as how to provide climate knowledge to suppliers, share best practices, define quirements, and collaborate on taking action.
STEP 10 -REPORT AND REPEAT
You took the first 9 steps, talk about it and share your learnings. This leads to your final step: report and repeat. You will repeat the process next year, so it’s the best time to get into the improvements and actions – together with your suppliers.
Let’s take action together!
This is why at THE CLIMATE CHOICE we empower every single company to become a climate champion in order to implement its climate targets and reduce emissions.
How? We start with the most impactful part: the supply chain. Which typically consists of hundreds and thousands of small and medium sized suppliers. They have the power to drive climate actions at scale. To do so, they need to understand where they stand in terms of climate transformation and work transparently together with their business partners to implement meaningful measures.
Our software-based Climate Intelligence Platform collects climate-focused data from companies, represents them in CLIMATE Scorecards and provides business insides into risks, potentials and best practices to reduce emissions.
Interview with Huawei Technologies on Climate Transformation
Interview partner: Xiang Ao is the Sustainable Development Officer at Huawei Technologies Deutschland GmbH. The multinational technology corporation has set climate targets within its own organization and along the supply chain to address the global threat of climate change.
Source: Lancaster University (2020); EDGAR, FAO, UNFCC, BCG analysis
Climate Significance of the Telco Industry
Today, the telco industry accounts for about 3% of global CO2 emissions, which is about twice that of civil aviation.
With global data traffic expected to increase around 60% each year, the ICT industry could be responsible for up to 14% of global carbon emissions by 2040.
This means that the telco industry is a huge lever for decarbonization and an opportunity for real change within the economy.
So how does a major global telco company still on the path of climate transformation, like Huawei, go about reaching its climate goals? This is what we will find out in this interview:
We are pleased to have partnered with Huawei Technologies Deutschland on the Climate Performance Assessment. Can you briefly introduce yourself?
Huawei Technologies is one of the world’s leading providers of information technology and telecommunications solutions. More than a third of the world’s population and more than half of the German population use Huawei technology directly or indirectly. With the headquarter in Shenzhen, the company has 207,000 employees worldwide and operates in 170 countries through its three business units Carrier Network, Enterprise Business and Consumer Business.
Huawei has been operating in Germany since 2001 and employs more than 1,700 people in 17 locations. Huawei’s largest European research center is located in Munich. As one of the world’s leading providers of digital information and communication technologies, we are a long-standing and reliable partner of German mobile operators and many fixed network providers. In its role as an infrastructure provider, Huawei has played an important role in the digitalization of Germany for many years. We are a service provider for our customers, and thus not only the starting point for every form of digitization, but also the catalyst for social developments.
Sustainable development is an important part of Huawei’s overall strategy. To address the global challenge of climate change, we believe that technology is a key enabler of sustainable development, to create a more inclusive and environmentally friendly world. Huawei hopes to work with global customers, suppliers, and partners to promote green and sustainable development in various industries and build a low-carbon society.
How are you positioning yourself in terms of climate transformation? What climate targets have you defined for yourselves?
Green and low-carbon development is rapidly becoming a global priority. Huawei believes that digital technology will be a key enabler of nature conservation, green development, and response to environmental challenges like climate change. Digitalization and decarbonization build upon each other and can together promote green development. For years, we have followed our pledge of “Tech for a Better Planet” to proactively address climate and environmental challenges. We use innovative ICT solutions to protect our shared home by focusing on three areas: advancing energy conservation and emissions reduction, promoting renewable energy, and contributing to a circular economy.
More specifically, we are striving to achieve the following goals by 2025:
Reduce the carbon emissions (Scope 1 and Scope 2 GHG emissions) per unit of sales revenue by 16% by 2025 compared with 2019
Increase the average energy efficiency of our main products by 2.7 times by 2025 compared with 2019
Ensure all of Huawei’s top 100 suppliers (by procurement spending) will have set carbon emissions reduction targets by 2025
How did the Climate Performance Assessment help you? What are the most important lessons you have learned?
We are very impressed with the well-organized structure and detailed questions of the Climate Performance Assessment, which will help us not only to internally assess our maturity in climate performance management, but also to benchmark where we stand in the industry. From this perspective, our current status is quite positive. To have such professional and easy-to-use scoring system is a big Win for the companies who wants to recognize its management status.
The structure of the assessment plays a very important role: the current 5 dimensions methodology, which ranges from climate strategy, governance & leadership, stakeholder management, carbon footprint to decarbonization measures, is quite efficient during this program.
What are the next steps you want to address as part of your climate transformation?
Huawei will continue to contribute to climate protection by integrating more emission reduction technologies and measures, and cooperating with other stakeholders to build supply chain responsibility. Huawei is currently in the process of managing its sustainability development together with climate protection to reach a higher level.
How do you deal with your supply chain and the emissions generated here?
Huawei manages sustainability in line with industry best practices and globally recognized standards. Sustainability plays a vital role in our procurement strategy and is a key part of our supplier management process, from supplier qualification and selection to performance appraisals and portfolio management. We regularly appraise suppliers’ sustainability performance and facilitate their continuous improvement by working closely with customers, suppliers, industry organizations, and other stakeholders.
Huawei has established its procurement CSR management system based on the OECD’s Due Diligence Guidance for Responsible Business Conduct and the IPC-1401 Corporate Social Responsibility Management System Standard, and incorporated CSR requirements into our procurement strategy and business processes. Our Supplier CSR Agreement is prepared according to the Responsible Business Alliance (RBA) Code of Conduct and the Joint Audit Cooperation (JAC) Supply Chain Sustainability Guidelines.
What tips and best practices would you like to share with other companies?
Environmental protection and decarbonization require the participation and contribution of all of us. Huawei has already made efforts in various fields and areas by promoting product improvement and technologies development, such as the industry’s first MetaAAU to support 384 antenna elements to reduce energy use by 30%, and industry’s first smart optical modem to reduce power consumption by 30% etc.. It would be great to see our suppliers, customers and business partners move forward, and we are happy to share more details and experiences with all interested parties.
Thank you for the honest and insightful interview, Xiang Ao. We are very pleased about the cooperation with Huawei Technologies Deutschland GmbH and look forward to driving forward the climate transformation of the economy together.
Interview with CTDI on their Climate Transformation
We are excited to work together with CTDI to advance climate transformation. Can you please introduce yourselves?
Interview Partner Jochen Bolzhauser, Quality & OpEx Manager at CTDI: CTDI is a global full-service company in the communication industry with over 20,000 employees across 100 locations. Test, repair, and integrated logistics services as well as spare part management of electronic systems are our core business. Our customers include major network operators, service providers, and many global manufacturers. CTDI is a family-owned business based in West Chester, USA. In Europe, we have over 4,400 employees across 12 countries, with our European headquarters located in Malsch near Karlsruhe.
The technologies we handle include access and transmission network equipment, all mobile technologies, set-top boxes, gateways, mobile devices, entertainment electronics, money and payment systems, industrial scanners, and printers.
How do you address climate in your business model?
Repair instead of throwing away – through our sustainable services, we help our customers reduce their own and global CO2e footprint. With “CTDI Planet Protect,” we aim to take this to the next level. We optimize our business processes to better support the circular economy. We also ensure that everyone takes responsibility for environmental protection within their daily work processes.
What are your climate goals?
We want to contribute to reducing CO2e emissions and conserving natural resources both as a company and through our services and technical developments. Therefore, we have aligned our climate goals with the Science Based Targets and aim to achieve a 100% reduction of Scope 1+2 emissions at all of our European locations by 2028. By 2030, we aim to reduce our Scope 3 CO2e emissions by 50%.
We conducted the Climate Performance Assessment together. What was your motivation for this?
Continuous improvement is one of our most important processes. Therefore, we regularly undergo ISO 9001 and 14001 audits, as well as customer audits, to continually develop and uncover untapped potential as a company. Another motivation is that CTDI always strives to obtain independent opinions on our environmental strategy. Only in this way can we achieve our ambitious climate goals. The Climate Performance Assessment helped with that.
What are the most important learnings you have gained? What are the next steps?
An important learning is that our “Planet Protect” strategy still has potential for improvement. One of the most important findings is the need for third-party auditing. We want to focus on this aspect in the coming years and possibly acquire a certified CO2e accounting software.
How do you deal with your supply chain and the resulting emissions?
We are in the process of demanding emissions from all of our logistics service providers. New contract partners will only be accepted if they support our “CTDI Planet Protect” goals. In the area of shipping, we already use CO2e-neutral logistics service providers in almost all areas.
What are best practices you want to share with other organizations?
Communication with all employees is the key to success for a successful implementation of environmental goals.
Thanks for the interview Jochen Bolzhauser, we are happy to drive climate transformation together!
10 Steps to put Supplier Engagement into Climate Action for 1.5°C target
To achieve the 1.5°C ambition of the Paris Climate Agreement, business action across the full value chain is crucial. More and more leading brands are joining forces in action groups to tackle this challenge, such as the “1.5 Supply Chain Leaders” founded by the Exponential Roadmap Initiative.
The NGO brings together innovators, transformers and disruptors taking action in line with the 1.5°C ambition. Their common mission is to halve global greenhouse gas emissions before 2030 through exponential climate action and solutions.
In CHOICE Event #56 we learned from Laure Pérez Casado, Project Lead at Exponential Roadmap Initiative, how to engage suppliers for climate actions. Find here the most important 10 steps.
1. Set your foundation
It all starts with a strong foundation. Starting a supplier engagement program for decarbonization, needs to have a clear set up first. Therefore, companies need to start with their own journey before they can reach out to their business partners. As first step: Make your climate commitment public, set a target and include your supply chain, assess your emissions and be clear about your priorities about actions and solutions you want to implement in your own transition. Aim high: Cutting emissions halve until 2023 is inline with the Paris-1,5°-target.
2. Accept the ambiguous status quo
Even within the own company, targets, strategies, incentives and requirements can differ quite a lot. Typically, sustainability and procurement office need to align first to assure a successful program outcome. Form your #TeamClimate and ask yourself: Why do we need a program – for reporting, buying decisions or actions? What can be done? Which outcome is anticipated? Who needs to be involved? When can we start?
3. Be simple!
Often company leaders want to get everything done in one step. That is us humans, we like simple solutions. But honestly, simplicity needs to stay simple. If you start with a too complex system right from the beginning, frustration levels can be very high – on all sides. Do yourself a favour by asking simple questions first. Such as: Have you set climate targets? Did you calculate your emissions and which kind of climate actions are you planning to implement?
4. Focus on your hotspots in the supply chain
Great! You have set climate targets, aligned with your company internal action team – and know which data points you want to collect and how you want to roll out the program. Now is the time to find a simple way, to pre-screen your supply chain. Many companies work with third party data, databases and / or a spend-based approach to have a first understanding of the status quo of their value chain. This way, you can cluster suppliers into areas of strategic importance and find hotspot, on which you can should focus. The Climate Intelligence Platform offers a fast and simple way to start screening your supplier base and kick-off your Supplier Climate Engagement Program – start today and create a free account.
5. Clarify data needs for sustainability and procurement
Last, but not least, before you reach out to your supply chain: Get on the same page. Make sure (again) that your internal stakeholders are all aligned. Is everyone onboarded in your #TeamClimate? Your sustainability and procurement team will mostly likely work with the collected data and have certain expectations of the results you are aiming for. As you very likely have already iterated the process, align on the data, processes and next steps. Just to be sure.
6. Set up the process: procurement or sustainability team?
Now, it is time to get started. Most companies have the supplier engagement program organized by the procurement team, but need the sustainability team to provide insights and a clear message that is published regarding your supply chain climate target. This allows procurement to address suppliers in collaboration with your #TeamClimate and supports the credibility of the program.
7. Start engaging supplier by stressing the “why”!
Your moment to shine! You go out and communicate with your suppliers. This is not a one-way conversation. Invite for collaboration, share knowledge and resources and provide guidance through your anticipated journey. Most important: Provide incentives to get suppliers on board. Take away the fear of being rated top-down and instead share benefits for suppliers that are supporting your climate initiative. Find out more in the CHOICE Event “How to Qualify, Assess and Develop Suppliers for Scope 3 Decarbonization“.
8. Don’t overwhelm, stay simple!
Be aware that climate management can be frustrating. You might have suffered along the way, too. Just because you are now further ahead, does not mean your suppliers are there yet. Get them onboard and be open for feedback, together you can improve. We are all in this journey together and face a transition to a low carbon economy that will take until at least 2050. Many opportunities will come along the way. Get your business partners engaged and motivated.
9. Dare to take decisions
Nevertheless, the goal is clear. Cutting emissions, building up skills for a structured transformation and gaining insights on the climate maturity of your suppliers. This means, the moment you have gathered information, received feedback and have finalised your data integration, you have to take decisions. Data is there to be used! Not to be gathered only. Make sure you gain insights for decision making from it. You need to define a baseline from which you started and plan next steps that bring you and your suppliers closer towards Net Zero. Decisions that need to be taken: How do you provide climate knowledge to suppliers? How do you share best practices and benchmarks? How do you define supplier requirements and collaborate on taking action? Find out “How to generate Value from Supplier Climate Data” in this CHOICE Event.
10. Report and repeat
Finally, you also need to celebrate your success! It is great that you tackle the biggest challenge of the corporate world today: the climate transformation and decrabonization of your supply chain. Acknowledge that this is the only valid way to decrease emissions in a meaningful way – in Scope 3, where up to 90% and more of the total corporate emissions come from. Companies cannot reach Net Zero emissions over night. And focusing only on Scope 1 and 2 emissions, does not at all support the full requirements and climate targets. You and your #TeamClimate started an awesome journey that is highly influencing the financial, social and environmental impact of your company. Now, be transparent about what you achieved (and what not). Share within your company and externally. You took the first step, talk about it and share your learnings. You will repeat the process next year, so it’s the best time to get into the improvements and actions with suppliers.
You want to start you simple and scalable supply chain deacarbonization journey?
You can now start your own supplier screening and evaluation process by creating a free account on the Climate Intelligence Platform, which streamlines and automates the workflows to save your company time and money. Within the free basic account you can invite an unlimited number of your suppliers and start your supply chain transformation journey towards Net Zero. Get started today with a free account!
Measuring and Understanding your Scope 3 Emissions
For most companies, the majority of their greenhouse gas emissions (up to 90 %) lie in their supply chains – so-called Scope 3. Reducing those Scope 3 emissions provides the biggest lever for corporate climate transformation, but it is also by far the most difficult. The first step and basic requirement is to measure and holistically understand the company’s Scope 3 emissions.
You need primary Scope 3 data of your suppliers? Our AI Supplier Screening provides you with climate relevant data to assess the climate maturity of your supply chain, unlocking potentials for improvement.
That’s what we learned at the CHOICE Event #55 from Richard Scholz from the WifOR Institute and Yasha Tarani from The Climate Choice. Here you will find the most important insights from their joint presentation.
Scope 3 Reporting Becomes Mandatory under CSRD
Companies worldwide are facing increasing pressure from stakeholders and regulations to meet their climate targets. Of particular importance is Scope 3, as defined by the GHG Protocol, which, in contrast to Scopes 1 and 2, includes all upstream and downstream emissions along a company’s supply chain. This new importance of Scope 3 is, among other things, becoming apparent in the fact that Scope 3 reporting becomes mandatory under the upcoming EU wide Corporate Sustainability Reporting Directive (CSRD).
From 2025 onwards, companies in Europe meeting two of the following three conditions will have to comply with the CSRD and thus report scope 3 emissions:
€40 million in net turnover
€20 million in assets
250 or more employees
In addition, non-EU companies that have a turnover of above €150 million in the EU will also have to comply.
Different methods of measuring Scope 3
With this in mind, we are going to have a look at how exactly companies can go about to tackle their Scope 3 emissions. The first step is definitely to measure the emissions from their supply chain. For this, the GHG Protocol suggests to use different calculation methods, depending on the availability of data.
As shown in this graphic, you can use either supplier-specific data or secondary data (i.e., industry average data). The different methods are sorted according to their specificity. The best calculation method is by far the supplier specific method on top. However, if you have not done a calculation yet, starting at the bottom of the method sorting is the recommended approach. The so-called spend-based method uses average data points.
The spend-based method of measuring Scope 3 emissions
The starting point of a spend-based method is the purchase list, also referred to as your spend file or order placements. It should include all goods and services purchased by your company. Three information are of particular importance here:
Which kind of products/services are bought?
Where are those products/services produced?
How much of those products is bought?
To understand this better, let’s have a look at a concrete example. We assume that our chemical products purchased from the USA are worth 300,000 €. So we know the type of product, the country of origin and the amount of products purchased. After those basic observations, we now look at model data. In the model data, we find out how much revenue the chemical industry in the USA has and also how much CO2 emissions the chemical industry in the USA is emitting. With this information, we can now attribute a certain certain of CO2 emissions to the revenue of the chemical products that our company bought.
Adding Tier 2 and 3 emissions of suppliers of suppliers
However, with this first step, the process of measuring Scope 3 emissions is not concluded yet, as the results only represent the Scope 1 emissions of the suppliers. In order to also calculate the tier 2 and 3 emissions of suppliers of your suppliers and so on, you will need an additional purchase list from the chemical industry of the US – so-called model data.
Now we look at each and every purchase item that the chemical industrie of the US is buying. And we attribute a certain amount of CO2 emissions from those other industries across the whole world that the US chemical industry is buying from. That for example also includes the Scope 2 emissions of the US chemical industry, because they are buying electricity. You need to repeat this process with a list of the tier 3 suppliers, so the emissions caused by suppliers of tier 2 suppliers.
Moving the ladder all the way up to the supplier-specific method
The spend-based method is a good starting point to get a first impression of the emissions of your supply chain. However, the goal should always be to move up the ladder as quickly as possible from average data to deeper and more specific climate information of your suppliers. This is where specialized software tools like the Climate Intelligence Platform come into play.
The Climate Intelligence Platform provides a way to efficiently automate the various steps of the supplier-specific method for Scope 3 decarbonization. Companies receive everything they need to set up, test, manage and achieve their supplier climate engagement targets – from data acquisition to tracking and engagement. Via the platform they can access and acquire a wide range of audit-ready company risk as well as emission data and support their suppliers in their decarbonization journey.
Start with the AI Supplier Screening
Through the use of AI, you can now quickly access data from public sources about your suppliers on a large scale, allowing you to better collaborate on decarbonization efforts. On top of that, you gain essential strategic insights about the climate maturity of your business partners and competitors.
Embark on your Scope 3 climate journey today! Together, we’ll pave the way for informed climate choices and a sustainable transformation that makes a real difference.
IT Sustainability is a fundamental part of the Allianz business model
Rainer Karcher, Global Head IT Sustainability at Allianz Technology
As Global Head of IT Sustainability at Allianz Technology, Rainer Karcher’s role is to drive the decarbonization of the IT operations of the Allianz Group, one of the leading integrated financial services providers worldwide. He is further responsible for the integration of Sustainability according to the United Nations Sustainable Development Goals (SDGs) into all parts of Allianz.
Rainer will speak at a fireside chat at the CLIMATE TRANSFORMATION Summit 2023. Today we are happy to meet with him to discuss together the urgency of climate action, and the role of digitalization in the successful implementation of climate targets. Don’t forget to book your Summit ticket to meet Rainer at #CTS2023 in May!
What does IT Sustainability mean for Allianz Technology and for Allianz overall? What role does digitalization play in the successful implementation of climate targets?
IT Sustainability is crucial for the business model of Allianz. We are a digital company – our products and services are mainly digital; we do not have factories or production sites. Therefore, the digital part represents about 30% of Allianz’s greenhouse gas emissions. With the increase of digitalization, this percentage can easily go upwards.
When speaking about the role of digitalization in achieving climate targets, there are two aspects: it can be part of the problem, if we don’t act responsibly, but there is also a huge opportunity that it is part of the solution. The more we get digitalized, the more we can get automated, creating an efficient digital world and reducing energy consumption.
You speak about decreasing the organization’s footprint, while increasing its handprint and ensuring a heartprint. What are the concrete steps taken to support this approach?
Allianz is a large corporation, with operations in more than 70 countries. So, the chances that there are redundant applications, software or services are quite high. All our entities act independently, and this is why our main goal is become more efficient together. Transparency is where we need to start: We must know exactly which energy is being consumed, where and why, and also understand what we can to do to make things better.
We can gain this transparency once we have a fully automated treatment of data, and with the help of AI solutions we will understand how we can create more synergies and become more energy efficient.
Another principle we apply is ‘following the sun’. We are trying to place the IT systems in a way that there is always renewable electricity available. At the moment, a lot of IT processes are handled at night, and the problem with that is that, if there is no wind blowing or sun shining, you don’t have renewable electricity. So, we are reconsidering all this in order to always allow possibility to have climate neutral solutions.
What are your goals with this strategy and when will you call it a success?
We do have two main targets: to achieve net-zero operations by 2030 and to reduce energy consumption from IT and communications by 2025 by 20% compared to the pre-COVID values, in 2019.
As long as digitalization increases energy consumption, we can only achieve our targets by a good understanding of how to handle data more efficiently and responsibly.
How do you deal with your supply chain and the emissions generated here?
In procurement, we are facing the challenge of having around 90% of the emissions coming from external third-party partners. This challenge can only be tackled in a close collaboration with our partners. And this is why I think that for Allianz Group the SDG number 17 – Partnership for the goals – is key.
This means we are trying to work together instead of working against each other: there shouldn’t be an approach where we say, “we are the customer, you are the service provider”, but instead we need to find our joint path in a collaborative way. And I have to say, so far this approach works pretty well.
Additionally, we have considered a measurable comparison of the environmental impact for our partners. For example, when it comes to tenders, we now have KPIs in place for measuring the environmental impact of the potential partners by asking them to answer to a certain set of questions, including social and human rights aspects, and evaluating them on a scale from 0 to 10. This indicator is now being considered the same way we used to look at the prices, offering us the chance to choose partners with a similar set of values.
I think the biggest misunderstanding in sustainability is that there is an expert out there that will come and save us all. The truth is what we need is multiple expertise as well as collaboration. So, gathering all existing expertise around one virtual table makes the event so interesting for me. I’m very much looking forward to some new inspiring information and, of course, to also share my own experience and have an open exchange.
How to Qualify, Assess and Develop Suppliers for Scope 3 Decarbonization
To truly achieve corporate climate targets, companies must activate and engage their suppliers, who can account for up to 90% of emissions (Scope 3). The first step is to clearly define the supplier structure and to pre-qualify suppliers for decarbonization on the basis of climate-relevant data. Suppliers must then be assessed and their climate strategy developed and supported accordingly. What is the best way to make this happen?
That’s what we learned at the CHOICE Event #54 from Maximilian Droste from amc Group and Yasha Tarani from The Climate Choice. Here you will find the most important insights from their joint presentation.
Why focus on Scope 3 Decarbonization?
More and more global enterprises are facing various risks and pressure from stakeholders to meet their climate targets today. The de facto standard, the Science Based Targets initiative, requires companies for which emissions from their supply chain (Scope 3) account for more than 40% of their total climate impact to set specific Scope 3 targets. Since Scope 3 emissions are on average 11.4 times higher than direct emissions, this applies to almost every company.
To start measuring and reducing these Scope 3 emissions, companies need to receive product related information from their suppliers. These include product carbon footprint information or lifecycle assessment data in order to compare products and services with each other. The big issue is that most of the suppliers are not ready yet to provide this information.
Without climate relevant data from their suppliers, companies cannot fully understand their climate risks and what measures they need to implement in order to achieve their climate targets. This is where the big challenge for decarbonizing the supply chain lies.
Calculating Emissions from Purchased Goods & Services
So how does calculating emissions from your suppliers actually work? An overview from the Technical Guidance for Calculating Scope 3 Emissions by the Greenhouse Gas Protocol shows that there are different data types used for different calculation methods. Most companies find themselves today still at the bottom with the main use of average data. However, the goal is to arrive at the supplier-specific method and collect as much supplier-specific data as possible. Only then can companies make truly informed buying decisions for decarbonization.
A new study by the Science Based Targets initiative shows that only 6% of companies with science-based climate targets are currently working with specific data from suppliers. This is due to various challenges when approaching their supplier base for climate data. In summary, these are:
Various levels of understanding
Lack of access to accurate CO2 data
Lack of climate management knowledge & capacity
Lack of collaborative tools & best practices
Lack of comparables & benchmarks
Different business sizes & a wide geographic distribution
Process is key for supply chain decarbonization
In order to overcome all of these challenges, companies must first and foremost ensure that sustainability and compliance are not only written down in declarations and codes of conduct, but that they are anchored in procurement and supply chain processes. Let’s have a look at how such a process can be structured. The process map shown as an example below has three different levels. At the top are strategic processes such as category management and long-term strategic development. They build the guardrails of action for an organization. Once the standards for strategic processes are set, it becomes easier at the tactical and the operational level to actually deploy them.
The most crucial process for decarbonization within the strategic level is the supplier relationship management. This is what we will now take a closer look at.
Supplier Management practices guide the process
The supplier management process has the intent of building long-term relationships and ensuring supplier quality based on objective assessments. Companies achieve this by first analyzing their supplier pool and defining relevant suppliers for further supplier management steps. They then evaluate the relevant suppliers by their performance in the past as well as their future potential. Lastly, a strategy of developing the suppliers based on their assessment results has to be defined and implemented.
Let’s go into more detail and look at the exact steps for the specific purpose of working with suppliers on climate targets.
1. Gain understanding of supplier structure.
Supply chains are complex structures that can often consist of multiple thousands of vendors. That’s why the first step is to create transparency and understand who is part of the supply chain. This requires accurate supplier screening in, as exemplified by the Climate Intelligence Platform. Different levels are needed in order to clearly define what the results of the screening mean.
2. (Pre-) Qualify suppliers for decarbonization based on climate maturity.
Once companies have established this visibility, they must define criteria to be part of the supplier structure. For example, this could mean that suppliers should be able to provide corporate as well as product carbon footprint information and have already set their own climate targets. The standardized qualification is the basis for increasing the quality of the supplier pool incl. approval process (barrier to entry).
3. Evaluate suppliers with performance scoring.
When evaluating the suppliers, it is important to gain insight into their holistic climate transformation. After all, individual findings such as CO2 data or top-down analyses of financial flows are far from sufficient here. The Climate Intelligence Platform therefore conducts an assessment in five dimensions: Governance, Strategy, Transparency, Metrics & Targets, and Decarbonization Measures.
4. Classification of suppliers to derive decarbonization strategy.
As a result of the evaluation, companies can now classify their suppliers into high performers and low performers. An overview of supplier ratings and score distribution, as shown in the Climate Intelligence Platform, helps to develop a strategy on how to increase their performance over time. Through the classification, every supplier receives the individual support that they actually need.
5. Derive strategy & development plan for supplier base.
Following the previous steps, the ultimate goal is to translate the established criteria and strategy into a concrete implementation plan. An example from the Scandinavian telecommunications group Telia shows what this can look like.
Automated data collection & collaboration with suppliers
As already shown in the examples, the Climate Intelligence Platform provides a way to efficiently automate the various steps of the supplier relationship management process for Scope 3 decarbonization. Companies receive everything they need to set up, test, manage and achieve your supplier climate engagement targets – from data acquisition to tracking and engagement. Via the platform they can access and acquire a wide range of audit-ready company risk as well as emission data and support their suppliers in their decarbonization journey.
Start with a free basic account for the Climate Intelligence Platform
You can now start your own supplier management process by registering for free on the Climate Intelligence Platform. Within the free basic account you can invite an unlimited number of your suppliers in a quick and automated way to become part of your transformation journey and work together with you on climate actions.
How Coca Cola Engages Suppliers for Science Based Targets
The Science Based Targets (SBTs) initiative helps companies set climate targets that are consistent with the latest climate science. A particular focus of SBTs is on supplier engagement, as 90% or more of companies’ emissions occur in their supply chains. Corporations have to work closely with their suppliers to set and achieve their SBTs. How does a major global company still on the path of climate transformation, like Coca Cola, deal with this challenge?
That’s what we learned at the CHOICE Event #53 from Cornelia Folz, Vice President Public Affairs, Communications and Sustainability (PACS) at Coca-Cola Europacific Partners Germany. Here you will find the most important insights from her presentation.
What are the Science Based Targets?
The Science Based Targets Initiative (SBTi) was founded in 2015 in the year of the Paris Climate Agreement by four NGOs – CDP, WWF, UN Global Compact and World Resources Institute. The initiative is considered a leader in both guiding science-based climate target setting and validating it. It defines and promotes best practice in emissions reduction and net-zero targets in line with climate science. Teams of experts provide companies with independent assessment and validation of targets.
The change has already begun and action is gaining pace. Over 2,000 organizations worldwide are leading the transition to a net-zero economy by setting reduction targets grounded in climate science.
Coca Cola’s commitment to Science Based Targets
Together with the Science Based Targets initiative, Coca Cola Europacific Partners has set an ambition to reach net zero greenhouse gas (GHG) emissions by 2040. Over the last decade, the company has already reduced GHG emissions across its entire value chain by 30.5%. Coca Cola now concentrates on reducing its value chain emissions even further, with a focus on scope 3 emissions where the biggest impacts occur. In all of this, Coca Cola is committed to an approach that prioritizes reducing greenhouse gas emissions wherever possible.
Key focus: mobilizing suppliers on climate change
In order to reach this target, Coca Cola puts a key focus on mobilizing its suppliers on climate change. Over 90% of the organizations GHG emissions are scope 3 emissions. Those scope 3 emissions include raw ingredients (25%), packaging (43%), operations and commercial sites (7%), transport (9%) as well as cold drinks equipment (16%).
So to really achieve the net zero ambition, Coca Cola has to work closer with its suppliers and support them in their decarbonization journey. To do so, the company has decided to start very easy with three clear and direct questions they are asking their suppliers:
Can you set your own SBTi-validated GHG emissions reduction targets by 2023?
Can you commit to using 100% renewable electricity across your operations by 2023?
Please share your carbon footprint data with us.
Supplier Carbon Reduction Program
These three questions form the basis for activation and close cooperation with suppliers. Once the ambitions, plans as well as the existing know-how regarding the setting of science-based targets, the transition to 100% renewable energy and the sharing of carbon data from suppliers are clear and known, the real work can begin. From this, Coca Cola has launched a program to motivate and support suppliers with knowledge and resources.
Together with the Carbon Disclosure Project (CDP) and the Science Based Targets initiative, Coca Cola has created specific training programs for their suppliers. Suppliers that are just starting their climate transformation can join these programs, receive guidance, and learn how and with what best practices to set science-based targets. They also learn about different emission factors and approaches to identify carbon hotspots, start reduction measures and track real progress.
Practical example: The Transport Tender
So how does this all impact the day to day work? Let’s have a look at the example of the transport tender that Coca Cola is sending to out logistics companies. It includes a clear message to suppliers that sustainability is one of the 3 key objectives of the tender. Via a bidsheet, suppliers can then offer prices for green solutions (rail, waterways, gas, biofuels, electric). This allows Coca Cola to transparently learn about and compare the extra costs of decarbonization measures with actual GHG savings.
On this basis, Coca Cola can discuss together with the suppliers on possible short and mid-term solutions. The decision making process is supported by formal calculations to weight tCO2e reduction vs oncost. Here, different alternative scenarios are created, which include the highest tCO2e reduction scenario, the cheapest scenario, and so on.
Conclusion: From easy to complex
The Transport Tender example shows how a simple question at the beginning evolves into more specific details and an ever finer process of collaboration and shared decision making as it progresses. This is exactly how every company should approach the process of decarbonizing its own supply chain. Because one thing is clear: the task is big and complex and can seem overwhelming at first. However, we are all still at the beginning of climate transformation and need to learn together step by step.
Start with the AI Supplier Screening
Through the use of AI, you can now quickly access data from public sources about your suppliers on a large scale, allowing you to better collaborate on decarbonization efforts. On top of that, you gain essential strategic insights about the climate maturity of your business partners and competitors.
Embark on your Scope 3 climate journey today! Together, we’ll pave the way for informed climate choices and a sustainable transformation that makes a real difference.
THE CLIMATE CHOICE says thank you for a special 2022!
What a year for climate champions! We all faced major new challenges in 2022 – especially companies that were particularly hard hit by the energy crisis and supply chain bottlenecks. Despite everything, you, the CLIMATE community, have continued to work with us to drive the transformation to a low-carbon economy. There have been many positive highlights and developments for which we at THE CLIMATE CHOICE want to say thank you. Let’s take a look at how 2022 allowed us to boost climate transformation all around the globe!
Kicking off the year with strong, new partners
Our year began with a firework of climate action. We were able to start working with many new major and influential customers for the Climate Intelligence Platform, including, as two special highlights, the corporate projects with the mobile phone provider o2 Telefónica and the baby food manufacturer HiPP. We kicked off inspiring collaborations to elevate the transparency of emissions along their supply chains by using our platform.
HiPP was able to successfully identify climate-related risks and potentials of five suppliers with the help of our software tool. HiPP’s Head of Sustainability Management Dr. Johannes Knubben reflects: “The software tool from THE CLIMATE CHOICE enables us to implement a scalable and reliable process to increase the climate-relevant transparency of our supply chain.”
Our next goal is to extend the software-driven climate data collection initially to other partners and ultimately to HiPP’s supply chain. Through an integration of THE CLIMATE CHOICE software tool into HiPP’s sustainability and procurement strategy, the full potential of climate-relevant supplier management is to be exploited.
Our corporate project with o2 Telefónica also successfully identified climate-related risks and potentials of the selected suppliers. The company is now able to develop a transparent, scalable process for collecting comparable data on the climate maturity of suppliers.
In the next step, we will integrate our platform into the procurement dashboard of o2 Telefónica. The climate-relevant data collection for the decarbonization of Scope 3 will be extended to around 1,000 suppliers.
CLIMATE TRANSFORMATION Summit 2022
The climate action kept on flowing and reached a new peak at our #CTS2022. For the third year in a row, we brought together international climate leaders and procurement experts for our two-day 100% online Climate Transformation Summit.
More good news: We just announced the date for #CTS2023! We cannot wait to welcome you on May 11 & 12 2023 for two days full of climate action! Our focus this year: Making it happen – the decarbonization of supply chains! Together with you and leading experts, we will find out how we can impement CO₂ reduction along the value chain.
The most important insight we gained from the discussions at the #CTS2022 was that small and medium-sized enterprises (SMEs) in particular still find it very difficult to get a quick start in climate transformation because they often do not have sufficient know-how and/or resources. In response to this challenge, we worked over the summer on a new solution offering.
The result: In October, we launched our digital and freely available Climate Readiness Check in partnership with 10 leading sustainability organizations. Among those B.A.U.M. e.V., Bundesverband Nachhaltige Wirtschaft e.V. (BNW), Stiftung Allianz für Klima und Entwicklung, Jaro Institut für Nachhaltigkeit und Digitalisierung e.V., and the Deutscher Mittelstands-Bund (DMB).
The Climate Readiness Check offers SMEs an easy entry point into their climate transformation: through knowledge and insights into their own climate maturity, benchmarks, suggestions for improvement, and access to a B2B climate data platform.
Our Launch was a full success! We are beyond happy to see so many companies kicking off their climate transformation with our Climate Readiness Check! We can’t wait to see who will join us in 2023!
In addition to the projects we developed ourselves, this year we were also part of pioneering external initiatives. Among them, one highlight: In August, we were selected from more than 2.000 applicants for the Climate Lab and Kickstart Innovation scale-up program in the finance and insurance track! Kickstart is one of the largest European Innovation Platforms. Each year they chose a select number of the best international startups to participate in a 10-week program.
We were honored to work in the program with corporates – such as Swisscom, Credit Suisse, AXA, Sanitas, Post Finance, La Mobilière, Coop, CSS, SATW – from the DACH region, who strive to reduce climate risks and emissions in value chains.
Thanks for the EU ‘Best Digital Solution’ Award
The cherry on top of 2022 was winning the “Best Digital Solution” award from the European Commission. The award recognizes the development of our software platform for the collection of climate-relevant data from suppliers and attributes it great impact potential for the greening and digitalization of European industry.
On behalf of the European Commission’s DG GROW, Deputy Director General Hubert Gambs emphasized: “Digital solutions are not only useful to be competitive and provide better value to European customers. They are also key to making our economy greener and European businesses more resilient to future shocks.”
We are so grateful and can’t wait to enable more businesses in boosting their climate transformation!
Many, many thanks for driving our Mission together!
Our mission at THE CLIMATE CHOICE is transforming every company into a climate champion and enabling businesses to make procurement decisions that are aligned with the 1.5-degree-goal! We have summarized our mission for you in this short video.
We are very grateful to work with inspiring companies – and that media is increasingly sharing our mission. THE CLIMATE CHOICE says thank you Süddeutsche Zeitung, t3n, Berliner Morgenpost, Gründerszene and many more, for featuring our platform and allowing us to gain more visibility on our mission!
Our Wrap up, 2022!
Let’s wrap it up before we go back to wrapping presents. 2022 was a complicated year for the world. We learned that the energy transition is a major driver for the overall climate transformation. We literally saw that it is interlinked with peace and has a positive impact on people, planet and profit. At the THE CLIMATE CHOICE we are therefore honoured that we were able to work on one piece of the puzzle – bringing us towards a regenerative future. These are our 5 highlights:
Started working with major new customers, including HiPP and o2 Telefónica
Held our 3rd 100 % digital CLIMATE TRANSFORMATION Summit with 64 speakers and 1.000 participants from 59 countries
Launched our new Climate Readiness Check, accessible for companies of all sizes for free to kick off their climate transformation
Won the EU ‘Best Digital Solution’ award of the Get Digital Initiative from the European Commission and the European DIGITAL SME Alliance
Süddeutsche Zeitung, Gründerszene, t3n, Berliner Morgenpost, Beschaffung aktuell and many more shared our work
Our biggest ‘THANK YOU’ goes to you, Climate Champion! If you are reading this, you are dedicating your valuable time to make this climate transformation a positive one. Whether you are Sustainability Manager, Procurement Expert, or Tech Champion: You are on a mission to strive together with us for an economy that allows the world to stay below 1.5 degree. Let’s start the new year with the same energy and even more climate action. Cheers to 2023!
Your #TeamClimate
THE CLIMATE CHOICE
THE CLIMATE CHOICE Founders Rey Farhan, Lara Obst and Yasha Tarani
